REG - Sovereign Metals Ltd - Power Supply MOU & Malawi Hydropower Project

Sovereign MetalsAnnouncement

21/05/2025 07:00

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RNS Number : 5169J  Sovereign Metals Limited  21 May 2025

NEWS RELEASE I 21 MAY 2025

 

SOVEREIGN SIGNS POWER SUPPLY MOU AS WORLD BANK APPROVES LANDMARK MALAWI
HYDROPOWER PROJECT

 

·    Sovereign and Electricity Supply Corporation of Malawi (ESCOM) enter
MOU to secure grid power supply for the Kasiya Rutile-Graphite project

·    MOU sets out strategic development workplan to supply 60MW hydropower
for steady-state operations through connection to the Nkhoma Substation

·    Malawi's grid power supply to be positively impacted by World Bank's
recent approval of a US$350m grant to support the Mpatamanga Hydropower
Storage Project (MHSP) which will significantly increase Malawi's installed
capacity by 2030

·    MHSP has been co-developed by the Government of Malawi and the
International Finance Corporation (IFC) (part of the World Bank Group) with
owners EDF, British International Investment, Norfund and TotalEnergies

Sovereign Metals Limited (ASX:SVM; AIM:SVML; OTCQX:SVMLF) (Sovereign or the
Company) is pleased to announce that it has entered into a non-binding
Memorandum of Understanding (MOU) with the Electricity Supply Corporation of
Malawi (ESCOM) to ensure the long-term supply of electricity to its Kasiya
Rutile Graphite Project (Kasiya or the Project) in Malawi. The MOU establishes
the framework for negotiating the following future definitive agreements:

·    Project Implementation Agreement, including construction and
installation of a new 132kV overhead power line, and

·    Power Supply Agreement, for the provision of bulk power supply from
Malawi's national grid.

The MOU follows discussions with ESCOM, the operator of Malawi's national
electricity grid, regarding the provision of electricity to the Kasiya Project
in preparation for construction and operation. The total installed capacity in
Malawi is currently 351MW, with approximately 98% of this capacity coming from
hydropower. During Stage 1, Kasiya's power demand will amount to 30MW,
increasing to 60MW at steady-state production in Year 6 of operation. The MOU
with ESCOM is a key step in the development of Kasiya and its Definitive
Feasibility Study (DFS) due in Q4 2025.

On 15 May 2025, the World Bank approved a US$350m grant to support Malawi's
Mpatamanga Hydropower Storage Project (MHSP), a large infrastructure operation
aiming to "transform the country's energy landscape and its economic
development trajectory." (Source: World Bank)

In September 2022, the Malawian Government selected a consortium of strategic
sponsors, which currently owns the MHSP, and consists of Electricité de
France (EDF) and SN Malawi BV, which in turn is owned by the UK Government's
development finance institution, British International Investment plc, the
Norwegian Parliament's development finance institution, Norfund, and global
energy company TotalEnergies SE. Once complete, the US$1.5Bn MHSP will deliver
358MW of additional generation capacity to the Malawi electricity grid.

Managing Director and CEO Frank Eagar commented: "The signing of the MOU
ensures we have a workplan to secure access to a renewable, hydro-based power
supply for Kasiya. The future development of the Mpatamanga Hydro Project -
expected to commence operations in 2030 - will further enhance the stability
and capacity of Malawi's electricity network. This also reflects ongoing
foreign direct investment in Malawi's infrastructure by the World Bank, IFC,
and leading global energy companies such as EDF and TotalEnergies."

Kasiya Power Supply

Over its planned 25-year life of mine, Kasiya is set to produce an average of
222kt of natural rutile and 233kt of natural flake graphite per annum. At
steady-state, Sovereign is positioned to potentially be the world's largest
producer of natural rutile and natural flake graphite with an approximate
power demand of 60MW.

To supply power from the hydro-based grid network, a 132kV overhead
transmission line will be constructed to connect the Kasiya site to the Nkhoma
substation, approximately 97km away. Nkhoma has been identified as the most
suitable connection point based on power reliability, technical feasibility,
and environmental and social considerations. This line will supply the
132/33kV Kasiya bulk intake substation.

Figure 1: Nkhoma substation has capacity for connection to the Kasiya
operation (Source: Millenium Challenge Corporation, USA)

Mpatamanga Hydropower Storage Project

MHSP is one of several large energy projects in Malawi supported by the World
Bank Group, reflecting the institution's strong commitment to supporting this
sector as an important enabler of economic growth and development.

In a World Bank press release, Nathan Belete, World Bank Division Director for
Malawi, Tanzania, Zambia and Zimbabwe commented: "This new hydropower project
is a game-changer for Malawi, capable of catalyzing transformative change in
productive economic sectors such as mining, agri-business and tourism. As the
country works on driving its economic development agenda, this new source of
clean and reliable energy will help drive business growth, create jobs, and
improve the lives of millions of Malawians."

MHSP's main and regulating dams on the Shire River will generate clean energy
and store power to supply electricity during peak demand hours, helping to
improve the reliability of Malawi's national grid. The hydropower facility
will also boost the grid's capacity to support the growing demand of the
country's mining companies, including Sovereign.

Other important investments by the World Bank in Malawi include the Emergency
Power Restoration Project focused on rehabilitating the Kapichira power
station, the Mozambique-Malawi Regional Interconnector Project, and the
recently approved Accelerating Sustainable and Clean Energy Access
Transformation (ASCENT) in Malawi project aiming to improve last-mile
electricity connections for the Malawian population.

Figure 2: MHSP hydro infrastructure (Source: World Bank)

ESCOM MOU

The purpose of the MOU with ESCOM is to record the mutual understanding for
negotiation in good faith of a Project Implementation Agreement and a Power
Supply Agreement (Definitive Agreements). The MOU is non-exclusive and
non-binding and remains subject to negotiation and execution of the Definitive
Agreements. The MOU will expire on execution of the Definitive Agreements or
on 30 June 2026, whichever is the earliest, but it can be mutually extended by
12 months.

 

 Enquiries
 Frank Eagar, Managing Director & CEO

 South Africa / Malawi

 +27 21 140 3190

 Sapan Ghai, CCO

 London

 +44 207 478 3900

 

 Nominated Adviser on AIM and Joint Broker     
 SP Angel Corporate Finance LLP               +44 20 3470 0470
 Ewan Leggat

 Charlie Bouverat
                                               
 Joint Broker                                  
 Stifel                                       +44 20 7710 7600
 Varun Talwar
 Ashton Clanfield

 Buchanan                                     + 44 20 7466 5000

 

Competent Person Statement

 

The information in this announcement that relates to Production Targets, Ore
Reserves, Processing, Infrastructure and Capital and Operating Costs is
extracted from an announcement dated 22 January 2025, which is available to
view at www.sovereignmetals.com.au. Sovereign confirms that: a) it is not
aware of any new information or data that materially affects the information
included in the original announcement; b) all material assumptions and
technical parameters underpinning the Production Target, and related forecast
financial information derived from the Production Target included in the
original announcement continue to apply and have not materially changed; and
c) the form and context in which the relevant Competent Persons' findings are
presented in this presentation have not been materially modified from the
original announcement.

 

The information in this announcement that relates to the Exploration Results
(metallurgy - rutile and graphite) is extracted from announcements dated 8 May
2024, 15 May 2024, 4 September 2024 and 21 November 2024, which are available
to view at www.sovereignmetals.com.au. Sovereign confirms that a) it is not
aware of any new information or data that materially affects the information
included in the original announcement; b) all material assumptions included in
the original announcement continue to apply and have not materially changed;
and c) the form and context in which the relevant Competent Persons' findings
are presented in this report have not been materially changed from the
announcement.

 

The information in this announcement that relates to the Mineral Resource
Estimate is extracted from Sovereign's 2024 Annual Report and is based on, and
fairly represents information compiled by Mr Richard Stockwell, a Competent
Person, who is a fellow of the Australian Institute of Geoscientists (AIG). Mr
Stockwell is a principal of Placer Consulting Pty Ltd, an independent
consulting company. Sovereign confirms that a) it is not aware of any new
information or data that materially affects the information included in the
original announcement; b) all material assumptions included in the 2024 Annual
Report continue to apply and have not materially changed; and c) the form and
context in which the relevant Competent Persons' findings are presented in
2024 Annual Report have not been materially changed from the disclosure in the
2024 Annual Report.

 

 Ore Reserve for the Kasiya Deposit
 Classification  Tonnes     Rutile Grade  Contained Rutile      Graphite Grade (TGC) (%)  Contained Graphite  RutEq. Grade*

(Mt)
(%)
(Mt)
(Mt)
 (%)
 Proved          -          -             -                     -                         -                   -
 Probable         538       1.03%         5.5                   1.66%                     8.9                 2.00%
 Total            538       1.03%         5.5                   1.66%                     8.9                 2.00%

* RutEq. Formula: Rutile Grade x Recovery (100%) x Rutile Price (US$1,484/t) +
Graphite Grade x Recovery (67.5%) x Graphite Price (US$1,290/t) / Rutile Price
(US$1,484/t). All assumptions are from the Kasiya PFS ** Any minor summation
inconsistencies are due to rounding

 

 Kasiya Total Indicated + Inferred Mineral Resource Estimate at 0.7% rutile
 cut-off grade (inclusive of Ore Reserves)
 Classification  Resource  Rutile Grade  Contained Rutile  Graphite Grade (TGC) (%)  Contained Graphite

(Mt)
(%)
(Mt)
(Mt)
 Indicated        1,200    1.0%          12.2              1.5%                      18.0
 Inferred         609      0.9%          5.7               1.1%                      6.5
 Total            1,809    1.0%          17.9              1.4%                      24.4

 

Forward Looking Statement

This release may include forward-looking statements, which may be identified
by words such as "expects", "anticipates", "believes", "projects", "plans",
and similar expressions. These forward-looking statements are based on
Sovereign's expectations and beliefs concerning future events. Forward looking
statements are necessarily subject to risks, uncertainties and other factors,
many of which are outside the control of Sovereign, which could cause actual
results to differ materially from such statements. There can be no assurance
that forward-looking statements will prove to be correct. Sovereign makes no
undertaking to subsequently update or revise the forward-looking statements
made in this release, to reflect the circumstances or events after the date of
that release.

 

 

 

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